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QUESTION Hang There will per There were there With Forsens B Inch 1 TO 1. X DQF PY x 5. Question Completion Status: Hickman's Fashions
QUESTION Hang There will per There were there With Forsens B Inch 1 TO 1. X DQF PY x 5. Question Completion Status: Hickman's Fashions can invest $5 million in a new plant for producing lip gloss. The plant has an expected life of 5 years, and expected sales are 6 million sticks per year. Fixed costs are $2 million a year and variable costs are $1 per stick. The product will be priced at $2 per stick. The plant will be depreciated straight line over 5 years to a salvage value of zero. The opportunity cost of capital is 10% and the tax rate is 40 percent A) What is the base case NPV B) what is the NPV if fixed costs turn out to be $1,5 million per year
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